KEYNOTE ADDRESS BY DR KOH POH KOON, SENIOR MINISTER OF STATE, MINISTRY OF TRADE AND INDUSTRY, AT THE AUSTRALIA-SINGAPORE INFRASTRUCTURE INVESTMENT FORUM AT MARINA BAY SANDS ON 12 JULY 2018, 9.00AM
Your Excellency, Mr. Bruce Gosper, High Commissioner of Australia
Distinguished Guests,
Ladies and Gentlemen,
Introduction
1 Good morning. I am pleased to join you today at the Australia-Singapore Infrastructure Investment Forum. To the guests who flew in specially for this event, a warm welcome to Singapore.
2 Singapore and Australia have enjoyed long strong relations, both economically and politically. Over the years, bilateral trade has grown steadily, and had reached over S$19 billion in 2017. Singapore is Australia’s fifth largest trading partner and top ASEAN trading partner. Singapore is also Australia’s fifth largest investment partner, with S$102 billion in investment recorded in 2016.
3 In 2015, Singapore and Australia elevated bilateral ties to a Comprehensive Strategic Partnership (CSP), which aimed to bring about even greater economic integration between our countries. Today’s forum is a manifestation of the deep strategic partnership. Under the CSP, Singapore and Australia are working closely together to implement joint initiatives across areas such as investments, trade, government procurement and access for business personnel.
4 There is space for us to continue to build on our strong partnership and expand economic cooperation in new areas. Today, I am delighted to be here to elaborate on how we can work more closely together through infrastructure investment and development.
Strong Infrastructure demand in Australia and Southeast Asia
5 Global demand for infrastructure investments is projected to grow significantly, in areas such as power, utilities, telecommunications, and transportation. A sizable share of this demand is expected to come from the Asian markets, which are rapidly developing and urbanising. From 2016 to 2030, infrastructure demand in Southeast Asia is estimated to be US$2.8 trillion.
6 Similarly, there is also demand for infrastructure within Australia as its population expands by 20% to an estimated 30 million by 2031. To this end, the Australian government had committed to investing in transport infrastructure to improve connectivity across Australia and alleviate congestion. The infrastructure sector therefore offers good potential growth opportunities for both Australia and Singapore companies.
Australian companies can tap on Singapore as an established infrastructure hub to capture opportunities from the growing infrastructure demand
7 Over the years, Singapore has built up significant capabilities in infrastructure development. We have cultivated a vibrant ecosystem across the entire infrastructure value chain – from multilateral development banks, private financiers, legal advisors, developers, engineers to contractors. This makes Singapore the natural place where regional infrastructure funds and players can find the whole suite of expertise and resources necessary for infrastructure development.
8 As a leading financial centre, Singapore hosts a variety of established financial institutions with expertise in infrastructure financing: from multilateral banks to private funds. Singapore-based banks have a deep understanding of Asia’s infrastructure needs as well as an extensive track record of working with Government and State Owned Enterprises in the region on infrastructure projects such as power, water, and transportation. Over the last three years, Singapore-based banks have provided loans or advisory services for an estimated 60% of infrastructure projects in Southeast Asia. I am pleased to witness later today the signing of a collaborative agreement between SOFOS Capital, Yunnan Water Investments, and Ping An of China Securities to set up an infrastructure fund in Singapore. This will contribute to the vibrancy of infrastructure-related activities in Singapore.
9 Our infrastructure ecosystem is also home to many world-class professional service providers, including design, engineering, and project management firms. For example, engineering companies in Singapore, such as Arup and Surbana Jurong, have worked on complex technical projects in the region, from rail projects in Singapore to hydroelectricity in Sarawak.
10 Singapore is also a well-established legal hub. Over 40 of the top 100 international law firms have established their presence here. The largest five Singapore law firms are also the largest in Southeast Asia, with strong presence and experience in infrastructure projects in the region.
11 The Myingyan power plant project in Myanmar is an example that had successfully leveraged on the wide-ranging infrastructure expertise in Singapore. The project, the first in Myanmar to be structured as public-private partnership, was awarded to Sembcorp Utilities. When completed, the 225 megawatt gas-fired power plant will be one of the largest gas-fired power plant in the country.
12 To finance the project, SembCorp Utilities had tapped on several developmental and commercial lenders based in Singapore; namely the Asian Development Bank (ADB), the International Finance Corporation (IFC), the Asian Infrastructure Investment Bank (AIIB), Clifford Capital, DBS Bank and OCBC Bank. It was also able to leverage on Singapore’s ecosystem of professional services, including legal services from Mayer Brown and financial advice from KPMG. The project also benefitted from the underwriting expertise from ADB, the Multilateral Investment Guarantee Agency (MIGA), and MARSH.
13 In consultation with the infrastructure experts in Singapore, the Myingyan power plant was able to pioneer a new public-private model that could be replicated for future independent power producers in the region, not only for gas-fired power, but also for renewables and in non-power sectors. In the same vein, Australian infrastructure players looking for greenfield or brownfield opportunities can find the necessary expertise for their ventures into the region - from the structuring of complex infrastructure projects, to delivery of solutions in a variety of sectors. Australian enterprises will also be able to benefit from Singapore’s global connectivity, established financial markets, and pro-business regulatory environment.
Australia and Singapore companies have complementary strengths in infrastructure project development
14 I believe all of us would agree that finding the right partners is key to business success. Singapore infrastructure players have strong technical competencies and track record in Southeast Asia, while Australian companies possess expertise in structuring and developing successful infrastructure projects. Hence, it is mutually beneficial for Singapore and Australian companies to partner each other.
15 To connect infrastructure demand and supply, the Singapore government had set up Infrastructure Asia, an outfit to bring together local and international firms across the infrastructure value chain to develop, finance, and execute projects. This office will provide a platform for information exchange on infrastructure opportunities in Asia, facilitate infrastructure investments and financing, and enable infrastructure players in the region to tap on these opportunities. I would encourage infrastructure players to reach out to Infrastructure Asia, to find out how they can support you.
Conclusion
16 In conclusion, there are significant potential gains in the infrastructure sector, in particular, in the region. By working together, Australian and Singapore companies can capture infrastructure opportunities in the region.
17 I wish everyone a fruitful discussion and may the networking session today lay the foundation for future collaborations. Thank you.